Market regulator SEBI amended The Listing Obligations and Disclosure Requirements (LODR) regulations and notified on June 8, 2018 that after December 5, 2018, except in the case of transmission or transposition of securities, requests for the transfer of stock shall not be processed unless the securities are held in the dematerialized form with a depository. If you are holding physical shares, then this is the high time to convert all your physical shares into demat form before the deadline of December 5, 2018.

Depository was introduced in India in the year 1996 with forming of Depository Act, 1996. Since then, many investors have complied and transferred their physical shares into electronic form. Nevertheless, according to a report by Economic Times, still, about 2.3 percent of India’s $2-trillion plus market capitalization is held in the form of physical stock. Mutual Funds alone hold shares, worth Rs.45,760 crores in physical form. About 1.24 lakh crore worth of physical shares is held by individual investors. Most of them are long term investors who hold the shares as succession or allotted under employee stock option.

However, the regulator said that any investor who is desirous of transferring shares which are held in physical form, after December 5 can do so only after the shares are dematerialized. Converting the shares to demat form is beneficial even for the investors who do not intend to sell or transfer the shares in the near future. Dematerialisation has many advantages. It removes many hassles associated with holding physical shares.

It safeguards against theft and loss of physical shares. On loss or theft of physical shares, the procedure would then involve lodging a police complaint, advertisement in a local newspaper and a long list of other documentation to get a copy of the bonus or split shares of the company.

It cuts down the cost and time involved in the transfer of shares. Shares held in demat form can be transferred easily with negligible cost and within a day or two. Whereas, it takes more than a month time to get the physical shares transferred.

It removes the hassles involved in the transmission of shares in future. The legal heirs will need to submit a Transmission Request Form and the probate of the Will/succession certificate along with the physical shares, death certificate of the deceased, PAN (permanent account number) card and proof of address of the successor and any other documents as may be required, to the company’s registrar and transfer agent (RTA) or its internal shares department. The company will then issue new certificates in the name of the new holders, i.e., the successors in physical form. If the new owner of the shares intends to sell these, then the shares will need conversion into demat with a depository like CDSL or NSDL.

It enables in getting the corporate benefits credited into the demat/ bank account without any delay or complex procedures. Issues such as unclaimed dividends, undelivered share certificates, change in company name/merger/acquisitions etc can be avoided.

In a nutshell, it is worth converting all your physical shares into demat at the earliest even if you do not intend to sell it. So, let us act immediately and not wait till the deadline of December 5, 2018 to convert our physical shares.

To open NRI Demat Account email us at nrihelpdesk@naviamarkets.com or Whatsapp us at +91 7338822169